Solar GST: the 70:30 rule and how to bill it
Updated 07-11-2026
When you supply and install a solar power plant under one contract, GST law does not leave the split between goods and services to you: 70% of the value is taken as goods and 30% as service. From 22 September 2025 that comes to 8.9% of the contract value.
The rule
An explanation added by Notification 24/2018-Central Tax (Rate) says that when a solar power generating system or solar power based devices are supplied together with construction, engineering, installation or other technical services for setting them up, 70% of the gross consideration is deemed to be the value of the goods and the remaining 30% the value of the taxable service. The same explanation stays in the goods rate notification issued for 22 September 2025 (Notification 9/2025-Central Tax (Rate)).
The rates today
| Part | Share | Rate | GST on ₹1,00,000 |
|---|---|---|---|
| Goods | 70% | 5% | ₹3,500 |
| Service | 30% | 18% | ₹5,400 |
| Total | 100% | 8.9% | ₹8,900 |
Before 22 September 2025 the goods part was taxed at 12%, so the same contract carried 13.8%. The GST Council's 56th meeting cut renewable energy devices and their parts from 12% to 5%.
When it applies — and when it does not
- A rooftop or ground-mounted plant supplied and installed under one contract — the usual EPC job.
- Panels or an inverter sold on their own, with no installation, are a plain sale of goods at that item's own rate (5% for panels and inverters).
- Batteries, cables and switchgear sold separately are taxed at their own rates (18% for most of them).
- An AMC, panel cleaning or a repair visit after handover is a separate service at 18%.
How the bill should look
- Two lines for the contract value: the goods part (70%) with its HSN — 8541 is the usual heading for photovoltaic modules — and the service part (30%) under a service heading such as 9954 (works contract), 9983 or 9987.
- Work the split on the value before GST, so the two lines add up to the contract amount exactly.
- Billing by milestone — advance, delivery, commissioning? Use the same 70:30 split on every milestone bill.
- Money received in advance: GST is due on the service part of an advance, not on the goods part (advances for goods carry no GST under Notification 66/2017-Central Tax).
Contracts differ — a plant supplied by one company and installed by another, or a project split across several contracts, can be treated differently. Have your CA confirm how your contracts are billed.
In the app
Set the project to "Solar Plant (70:30 Deemed Split)" and every milestone invoice gets the two lines at the rates in force on its date, adding up to the milestone amount exactly; an advance taken on the project carries GST on its service part only.
Sources
- West Bengal Authority for Advance Ruling, order 02/WBAAR/2025-26 of 8 May 2025 — sets out the 70:30 explanation of Notification 24/2018-Central Tax (Rate)
- GST Council — 56th meeting, PIB press release of 3 September 2025 (renewable energy devices and parts, 12% to 5%)
- FAQs on the decisions of the 56th GST Council, 3 September 2025 (renewable energy devices)
Checked against the official text on 07-11-2026. This is general information, not tax advice.